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Investment in digital transformation of SMES key to building global economy
Published in The Saudi Gazette on 29 - 09 - 2020

Small and Medium Enterprises (SMEs) play a critical role in the global economy. They are also under immense pressure to digitalize to keep up with the pace of change and become resilient against the effects of the current and future pandemics, according to experts from global development organizations.
Government support alone is not enough to facilitate this change; instead, entire ecosystems that include the public sector, private financial institutions, universities and small and micro firms must be developed in order to facilitate digital transformation and create sustainable resilience and development.
These were the conclusions drawn from the latest virtual panel session from the Global Manufacturing and Industrialization Summit's #GMIS2020 Digital Series.
Experts from government and international development organizations, including the United Nations Industrial Development Organization (UNIDO), the Arab Bank for Economic Development in Africa (BADEA), the Union of Arab Chambers and the Confederation of Indian Industry convened to discuss how innovation is being nurtured in their countries and within their organizations, and to share best practices in supporting and encouraging SMEs to join the technological revolution against the backdrop of the global pandemic.
The experts agreed that multi-stakeholder partnerships were central to facilitating innovation and creating resilience in SMEs. They also emphasized the need to channel investment into the SME sector globally, in order to help them develop world-changing innovations and digitize their processes and services in order to be ready to participate in the economy of tomorrow.
Dr. Bernardo Calzadilla-Sarmiento, managing director, directorate of digitalization, technology and agribusiness, United Nations Industrial Development Organization (UNIDO), said that investment in bolstering the digital capability of SMEs was crucial to local, regional and global economic recovery.
"COVID-19 has put a lot of strain on our society and the economies around the globe. To help SME businesses continue to recover from the pandemic, they need proper access to finance and investment to help them foster digital capabilities.
"We need to ensure that SMEs are part of the digital transformation if we want to build a sustainable future — allowing progress that enhances the opportunities for all."
Dr. Hashim S. Hussein, head of the UNIDO's Investment and Technology Promotion Office in the Kingdom of Bahrain (ITPO Bahrain), shared best practice from the last 20 years in supporting ecosystems that encourage both the domestic investment and mobilise foreign direct investment that can facilitate technological progress in 52 Countries around the world.
"We must support SMEs around the world to become more engaged with technology and ensure entrepreneurial resilience. In Bahrain, we have long-running programs that support start-ups, micro, small and medium businesses through the creation of ecosystems that encourage investment and outside of the country, we are focused on supporting the industrialization process of developing countries by helping to attract investment into SME programs that embrace technological change."
Veronika Peshkova, UNIDO goodwill ambassador, agreed that helping SMEs develop digital capability is central to creating a sustainable future.
"The world is becoming more and more automated with digital industry already representing 30% of the world's GDP whilst productivity annual growth rate is four times that of so-called ‘physical industries'.
"70% of all investment is attracted to ICT, and yet COVID-19 is likely to drive this rapid growth even faster, transforming all industries. However, the speed of this change brings the risk of widening and increasing inequality between those who have the skills to adapt to the digital revolution, and those who don't."
She outlined the issue of gender balance in economic development, and how the digital revolution may exacerbate the problem. Peshkova said: "Many of the roles that could be automated by digital technology are currently occupied by women.
"Therefore, we need to work to empower women to upskill and progress into managerial roles that require human thinking. To do this, it is essential to ensure women's voices are heard, and their role in decision making and leadership are increased.
"We not only need to remove barriers that prevent the development of technical knowledge, but we must also work to engage men in the discussion and challenge societal norms that are currently holding women back. This is not really an issue of human rights, it is an issue of economic growth and welfare."
Dr. Khaled Hanafy, secretary-general of the Union of Arab Chambers agreed that partnership was vital to nurturing SMEs and facilitating digital transformation, saying: "You need to have a system that works on every level of the economy to support entrepreneurialism.
"For example, not only do you need public-private partnership, but you also need to create partnerships with universities as this is often where the ideas originate. We are currently developing an innovation program that will be run across the Arab world creating training sites and mentor opportunities that will allow R&D to thrive."
Safia Boly, former minister for the promotion of private investment, small and medium enterprises and national entrepreneurship, Ggovernment of Mali, said partnerships that facilitate economic resilience all levels are vital for building economic resilience, particular when discussing SMEs.
"One of the key ingredients for building resilience and sustainability in Mali, is to ensure access to finance for small and medium enterprises. Have difficulty meeting the requirement of conventional financing with commercial banks means entrepreneurs often resort to institutions of microfinance.
"Therefore, our effort to foster entrepreneurship leadership relies on our programs that promote domestic investment and leverage and obtain foreign direct investment. However, foreign investors need very strong layers of domestic investment to give them assurance Therefore, by building resilient, small and medium enterprises we facilitate confidence in their investment."
Anjan Das, executive director, Confederation of Indian Industry and director of technology and innovation, agreed with the idea of encouraging partnership and discussion with academic institutions; "We find that there is a disconnect between the private sector and academic and R&D institutions and I think this is a global issue.
"In India, we have created a government fellowship program for PhD scholars in universities to focus on an innovation-led problem funded by the private sector and the government in partnership. This program will create more technological innovation and drive industry, all through a collaborative, partnership model."
The panel, entitled ‘Impact Investment through the Enterprise Development & Investment Promotion Programme' was moderated by Nejib Friji, MENA director of the International Peace Institute, and brought together leading experts from around the world to discuss ways in which investment can best be channeled to drive international development and drive prosperity.
The panel discussed the type of support needed to sustain start-ups and the growth of SMEs and how entrepreneurs can embrace technological opportunities and be at the forefront of digitalization and the Fourth Industrial Revolution. They also discussed the requirements needed to achieve Sustainable Impact Investment — all against the backdrop of the current global pandemic.
The panel offered views and approaches from around the world, highlighting regional differences and highlighting opportunities for collaboration. Friji, was joined by Dr. Calzadilla-Sarmiento, Peshkova, Dr. Hussein, Boly, Dr. Hanafy, Das, and Dr. Sidi Ould Tah, director-general, Arab Bank for Economic Development in Africa (BADEA). — SG


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